International Archives - Green Market Report

Adam JacksonMarch 31, 2023

Company plans to exclusively cultivate and produce its cannabinoid products in Colombia.

Adam JacksonMarch 28, 2023

The merger with MediPharm Labs is expected to close within weeks.

William SumnerNovember 19, 2018

As the international cannabis industry begins to open up, thousands of investors and entrepreneurs are pouring millions of dollars into this nascent market. At the Marijuana Business Conference & Expo (MJBizCon) in Las Vegas, attendees were able to learn about the best practices for investing in the global cannabis market and how to avoid some of the pitfalls inherent in the international investment.

Speaking on the subject was a panel of cannabis financial experts. The speakers included Adam S. Fayne, an attorney at Saul Ewing Arnstein & Lehr; John McMullen, CEO of LGC Capital; Josh Rosen, Co-founder and CEO of 4Front Ventures; and John Sabetti, a Partner at Fasken Martineau DuMoulin.

Starting off the discussion panel was McMullen, who issued a short-term prediction for the trajectory of the cannabis industry.

“I think the forecast going forward for the next one year is still going to be extremely explosive, but that’s because borders are opening globally,” McMullen said.

Citing a report by the Bank of Montreal, McMullen went on to say that in Europe alone, the adult-use cannabis market is predicted to reach $98 billion by 2025. However, McMullen also warned investors to be circumspect about who they invest with; stating that some of the cannabis companies out there are overvalued.

“If you look at valuations, some of these companies, they’re just too farfetched,” said McMullen. “There are better companies out there, real companies.”

Echoing McMullen’s sentiment, Rosen stated that it is becoming increasingly difficult to discern the difference between real investment opportunities and fraudulent ones.

“We’re this stage where discerning between signal and noise is really challenging,” said Rosen.

Rosen continued by saying that although investors are starting to conduct due diligence on par with some financial institutions, it is still relatively shallow compared to other global industries. According to Rosen, when investing in a cannabis company, investors should look at the operator’s level of personal investment.

“One of the things from my investment management career that I always looked at, and I think it still holds true, is how much skin do they have in the game? How much of it is just other people’s money,” advised Rosen.

Noting the increased level of investor diligence, Fayne closed out the discussion by recommending to cannabis operators that they should be completely transparent with investors when seeking capital funding.

“Investors these days are getting smarter,” commented Fayne. “You want to be upfront with them; you want to show them all the positives, you want to show them where there are some landmines.”

Video StaffSeptember 24, 2018

Cannabis is one of the most popular recreational drugs on the planet, and its potentially
wide-ranging medical uses show promise. Given its low rates of addiction and lack of adverse
health outcomes, cannabis has the potential to replace common pharmaceutical treatments
for chronic pain, seizures, insomnia and other conditions that afflict hundreds of millions of
people worldwide. Likewise, cannabis also has the potential to disrupt the alcohol industry
by serving as a substitute for beverages such as wine, beer, and spirits.

Along with the United States and Canada, several countries have followed suit in relaxing
their cannabis laws and allowing for the use of medical cannabis; which in turn paves the
way for a fully regulated and legal recreational market. Several potentially large international
cannabis markets include Germany, Spain, Australia, Israel, and Colombia.

It is difficult to estimate global cannabis prices because cannabis sales usually occur in the
illicit market. Typically, cannabis prices vary depending upon location. Germany has some of
the lowest cannabis prices in the world. Other countries, such as Israel, are starting to see
higher prices as cannabis begins to move into regulated pharmacies.

Due to complex regulations and various international laws, international cannabis supply
chains are fragmented, with only a handful of companies operating internationally. The
largest of these global companies is Canopy Growth Corp., which has a presence in seven
countries along with the United States and Canada.

International Pricing

Due to its status as an illicit or semi-legal substance in much of the world, there has yet to
be a set international commodity price for cannabis. Even in countries like the U.S., where
recreational cannabis is legal in nine states, the price of cannabis can vary significantly by
state.

In Oregon, for example, extreme competition among cultivators has driven down cannabis
prices to roughly $1 per gram. However, in California, a newly open recreational market,
cannabis prices are between $11 and $14 per gram. According to Cannabis Benchmarks,
which tracks the wholesale pricing of cannabis, the national average price of a pound of high-quality
cannabis is approximately $1,285.

Due to federal legalization, cannabis prices in Canada are slightly more consistent. Most
provincial governments are aiming to price cannabis at CAD$10 per gram. On average,
medical cannabis in Canada costs around CAD$8 per gram. However, as legalization goes
into full effect in Canada, prices may fall within the first several years as competition
increases in the cannabis space and as large-scale cannabis production is actualized.

You can read the full report titled “The Economics of International Cannabis Companies” here.